tag:blogger.com,1999:blog-5848640164815342479.post1602133557434375516..comments2024-03-27T15:36:44.737-07:00Comments on Haq's Musings: Mumbai's Economic ImpactRiaz Haqhttp://www.blogger.com/profile/00522781692886598586noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5848640164815342479.post-65219405443755537582009-01-18T20:59:00.000-08:002009-01-18T20:59:00.000-08:00Even before Mumbai attacks and the Satyam scandal ...Even before Mumbai attacks and the Satyam scandal and despite the 55% drop in India's benchmark Sensex in 2008, relative valuations were high. The market's PE ratio, based on expected earnings for the next 12 months, is 60% higher than emerging markets as a group and 72% higher according to its price-to-book ratio. The roughly 2% yield on the Sensex is minuscule compared to regional markets offering upwards of 5%.<BR/><BR/>India's market cap overtook its GDP in May 2007. By January 2008, it had reached 180% of GDP, extraordinarily high compared to 131% for the U.S. during the dot-com bubble and 150% for Japan at its market peak. In July, the market-cap ratio dropped below 100%. What it means is that even if the Indian economy continues to do well over the next two decades, GDP would have to more than double for the market cap to return to its previous heights without an equities bubble. If the economy keeps growing at 7.2%, that doubling would take at least ten years.<BR/><BR/>Hong Kong-based Political & Economic Risk Consultancy Ltd. has recently rated India as the riskiest of 14 Asian countries, not including Pakistan and Afghanistan, it analyzed for 2009. Satyam scandal is likely to add additional risk if the Indian authorities and corporate sector fail to take measures to restore investor confidence in India's publicly traded companies.Riaz Haqhttps://www.blogger.com/profile/00522781692886598586noreply@blogger.comtag:blogger.com,1999:blog-5848640164815342479.post-83795484661246933442009-01-09T06:41:00.000-08:002009-01-09T06:41:00.000-08:00DOnt worry about the India story. It will continue...DOnt worry about the India story. It will continue to grow at 6-7% even in the worst of the ecessions seen. And the moment the global economy starts doing well, we will go back once again to the 8-9% level. Ours is not an export led economy.Much of the growth is being fuelled by the swelling demand for goods from the almost 300 millions strong middle class.Anonymousnoreply@blogger.com